The Truth About Cars » tariff The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 16 Jul 2014 04:01:57 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » tariff Canada To End Duties On Imported Vehicles From The EU, Will Recognize EU Standards Fri, 18 Oct 2013 14:02:06 +0000 bmw-3-series-wagon-450x275

As part of a new free trade agreement due to be signed with the European Union, Canada will remove its 6.1 percent tariff on imported vehicles from the European Union, while the EU will remove its 10 percent duties on autos and and its 4.5 percent duty on parts.

According to The Globe and Mail, Canada will have a quota of 100,000 vehicles that can be imported, provided they are made with 20 percent Canadian parts. Vehicle with 50 percent or higher Canadian parts content will be exempt from the quota and can enter duty free. Currently, Canada only exports 13,000 vehicles to the EU, with the Eurozone exporting substantially more to Canada. If anything, the deal will result in cheaper luxury cars for Canadians, rather than a sudden rise in vehicle exports from Canada to the EU.

EDIT: Mark Stevenson at is also reporting that, according to a European Commission statement

Canada will recognise a list of EU car standards and will examine the recognition of further standards. This will make it much easier to export cars to Canada.

I wouldn’t be holding my breath for all kinds of Euro hot hatches and diesel wagons just yet. BUT if someone like Volkswagen wanted to import the Polo (a car that would do very well in Canada, according to VW Canada sources who have done market studies), the once prohibitively high costs of homologating the car might be reduced, or even eliminated.

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Tradewar Watch 21: Stabenow, Brown And King Suggest Suicide, Seriously Wed, 01 Feb 2012 18:04:09 +0000


American carmakers cast worried glances on Senators and union groups that want to create a level playing field with China. Senators Debbie Stabenow and Sherrod Brown, alongside union representatives and the labor-backed Economic Policy Institute try to push “the administration to bring a possible case at the World Trade Organization or begin a U.S. Commerce Department investigation that could lead to duties on Chinese-made auto parts,” as Reuters reports.

A study by the EPI alleges that the Chinese auto parts industry has received $27.5 billion in government subsidies since 2001. The study forgets that large parts of the U.S. auto industry would not be here anymore, would it not have been bailed-out by the U.S. government.

Why are carmakers horrified by the surely well-meant suggestion? Several reasons:

  • Global parts sourcing, especially in China, has helped carmakers the world over to lower production costs. Slapping a punitive tariff on Chinese parts would raise the price of the parts, and make the car uncompetitive. First customers, then UAW members would pay the price for the folly.
  • But wouldn’t it bring jobs back to America? The experience with the tire tariff, enacted on instigation of the United Steelworkers, says otherwise: The production of cheap tires simply moved from China to Thailand. From there, the tires could be imported at a lower tariff than from China, for a while even duty-free. Not a single job was created in America with the tire tariff, but a lot of porcelain was broken.
  • As the volcano in Iceland, the tsunami in Japan, and the flood in Thailand have shown, the supply lines of the auto industry are intricate and can be easily damaged. Meddling with parts imports from China could have catastrophic effects on the U.S. car industry. By the time large swaths of the Chinese parts industry have been relocated to even cheaper parts of the world, U.S. manufacturers would be out of business, its people would be out of work.
  • Especially GM is inseparably tied to China. More than a quarter of GM’s global production is sold in China, GM’s largest single market. Ford is expanding its presence in China. Chrysler hopes to get back into China on the coattails of Fiat. These companies would be on the receiving end of retaliatory measures by the Chinese government.

It is not that the lawmakers and union officials are utterly naive. They know that most of the Chinese parts production was created if not by, then at the behest of foreign carmakers, U.S. and otherwise. Bob King, president of the United Auto Workers union, acknowledges this by urging “global corporations to refrain from a ‘race to the bottom’ to find workers that they can pay the least.”

Debbie Stabenow creates communal cringes on Detroit`s executive floors when she says:

“We need to stand up to the bully on the block. The bully on the block continues to take our lunch money and we need to stop that.”

Her solution seems to be to create empty pockets: Nobody can steal your lunch money, if you don’t have any.

Meanwhile, carmakers take cover and hope that the matter is over when the circus moves out of town in November.

GM’s Washington, DC, spokesman Greg Martin asks me to understand that he won’t say anything else than a prepared statement. It arrives a few minutes later by email.

GM’s success in China, which is now the company’s largest market, illustrates the benefits of trade and good economic relations to both countries. Because China represents tremendous growth potential for American companies, we hope that both countries continue to work through their differences constructively.

Well said. Let’s hope the prayers will find an open ear.

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